Owning your own property is a very British obsession, an ambition we’ve been culturally conditioned to work towards, and a notion that feels as old as bricks and mortar themselves.
However, new research from LV= shows the number of households in England that are privately rented rose from 2.4 million in 2005 to 3.8 million in 2011-12, a 58% increase and over half (52%) of adults in the UK aged under 35 live in a home they don’t own.
LV= also found that this trend is likely to continue as the younger generation’s attitude to renting is changing. 42% of renters aged between 20 and 35 are completely happy to rent for ten years or more and claim that it’s not important to them whether they ever end up owning their own place.
The research figures indicate that a seismic shift in attitudes to renting is taking place. Whereas nearly all of the previous generation of Brits polled (those now aged between 55 and 75) saw owning their own property as the ‘ultimate goal’ (93%), only a third (33%) of people under 35 now feel the same way.
In line with this, half of all renters (43%) no longer see bricks and mortar as a sign of success, and almost three quarters (70%) say the notion that it’s in some way shameful to never own a property is completely out of date.
This more relaxed approach to owning property might be considered refreshing but it comes with a number of hidden perils including little leeway for renters should they not be able to pay for their accommodation and a lack of renters taking out income protection insurance. This is particularly striking when you consider that the cost of renting remains high enough to sink stomachs (and bank balances), with the average renter paying out 39% of their income on rent alone. That’s around £947 per month, and rises to £1,152 in the South East where rents are highest and consume nearly half (44%) of a person’s monthly income.
Mark Jones, LV= head of protection, explains: “It’s important to realise that renting does come with certain pitfalls that often aren’t signposted. When buying a property you are encouraged to take out an insurance policy to guarantee repayments in the event that something happens to the mortgage payer, no such prompt exists in the rental market. We know that one third of Brits currently rent and that 65% of these people have no insurance in place. This would leave a huge number of people in the UK in a vulnerable position if they found themselves unable to cover their rent and living expenses.
“Regardless of whether you are a homeowner or a tenant, it is important to have a financial back up plan in place which would enable you to carry on living in your home if you were unable to work. This is particularly important if any loss of income might affect your partner or family’s ability to pay the rent.
Indeed, far from being students or first job flat sharers, the majority (72%) of 20 – 35 year old renting are either married or in a relationship and earning an average of £34,084 a year.
Although ‘Generation Own’ needed no excuse other than ‘it’s the done thing’ to explain away their obsession with buying, the current generation’s reasons for renting are somewhat more varied. Casting aside the compulsion to set down roots, one in six (17%) young Brits rent because they don’t want to be tied down to any one place. 13% would rather get a feel for their area and their neighbours before making a decision, one in 10 simply have no inclination to buy, and 7% would rather spend their money on other things than putting it into property. In addition, the nations’ tenants are clearly unmoved by the government’s recent ‘Help to Buy’ scheme – 79% of the 1,700 20 to 35 year olds polled said this latest initiative hadn’t motivated them to put a foot onto the property ladder.
Naturally there are many young people that still want and hope to own property in the future – as reflected in the recent increase in first-time buyers. However, they’re realistic about when this will happen. While the previous generation expected to be ‘kings of their own castles’ by the age of 25, young folk today can’t see themselves putting down deposits on places until they’re at least 36.
Mark Jones concludes: “Depending on your point of view an end to the Great British insistence on owning a home might come as a long-overdue breath of fresh air. While previous research has suggested that those in ‘Generation Rent’ have had renting forced upon them by rising property prices and low mortgage availability, this report shows that huge numbers of young men and women are freely choosing tenancy and actually prefer it to ownership.
“However we would urge anyone renting to ensure they have a contingency plan in place, such as income protection, to keep their rent paid should their financial circumstances change for the worse.”